A lack of deliverable sugar ahead of Friday's expiry has sent the white sugar futures contract for May to its highest level in more than 10 years.
According to John Stansfield, a senior sugar analyst at DNEXT Intelligence, the open interest for white sugar, or the number of contracts still needing to be closed, implies a hefty delivery of the commodity above 880,000 tons.
The problem is that, when coupled with short positions, these contracts "don't have the physical sugar to tender," meaning the markets are once again irreflective of reality and more supply troubles are on the way.
In the last three weeks, white sugar futures have surged in price by nearly 20 percent, hitting levels not seen since November 2011.
(Related: In late 2010, heavy rains damaged sugar crops in Brazil, creating a shortage and sending prices soaring in 2011.)
Global shortages of sugar expected to worsen as growers shift to even more soybeans
As usual, ordinary people will pay the price for the mess in the form of higher costs for sugar-laden food items like candy, soda pop, and baked goods.
This, in turn, will continue driving global food inflation at a time when prices are already at record high levels.
According to Bloomberg, sugar prices have jumped on prospects for limited exports out of primary shippers like India, as well as in lackluster supply countries like China, Mexico, Thailand, and Europe.
India is currently one of the largest exporters of white sugar, but due to quotas that are almost exhausted, shipments are low and there is no real expectation of an increase anytime soon, said Soren Jensen, a longtime market observer.
It could be the case that India will soon have to shift from domestically produced raw sugar to imports from places like Brazil, which just began its sugar harvest.
There are problems there, too, though, as Brazilian sugar is now competing against a record soybean crop for space on railways and at ports, which has created a transportation bottleneck.
According to Wilmar International Ltd. Head of analysis Karim Salamon, sugar output estimates for the 2022-23 season will worsen the existing global shortage problem in the months to come.
"Next year's crop will probably not be better," Salamon warned. "The cane and beet acreage is likely to fall in most areas due to the effects of crop competition."
"Just create many millions of futures contracts and use high frequency trading, back and forth with descending bids," joked one commenter, pulling a trick from the playbook of precious metals manipulators. "You can drive the price down to your preferred level. It works perfectly for silver and gold."
Another person, a brewer, wrote that sugar costs have already doubled for him over the past year to the point that making beer is barely even viable anymore.
"Inflation is coming in droves, and theft is the only thing on the menu," wrote another.
Many others pointed out that the average person could use a major cut in sugar consumption, so perhaps higher prices are a good thing. The point they are missing is that food prices all across the board, including sugar, are rising beyond what people are able to afford.
"Been to the supermarket lately?" one said. "Show us one thing that's not at a decade high, please."
"This is engineered inflation," said another. "Anything for an excuse to raise prices."
The latest news about the escalating food and inflation crisis around the world can be found at Collapse.news.
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